India has three to five year Window to Capitalize on Alternative Manufacturer for China, says Ajay Banga
In the words of World Bank President Ajay Banga, India has a three to five-year window to capitalise on the China+1 potential as businesses seek alternative manufacturing sites to diversify supply chains. According to Banga, India has been more resilient and emerged from the pandemic relatively stronger than others, and he is more optimistic than before because the country is focusing on expansion and jobs, both of which are critical to reducing poverty. Former Mastercard CEO Banga, 63, was appointed World Bank President last month.
"India's current opportunity is to capitalise on the China+1 opportunity," Banga said. "This opportunity will not last ten years." This is a three-to-five-year opportunity when supply chains begin relocating or, better yet, expanding in another location." According to Banga, this was one of the topics discussed with the Indian government. China+1 is a post-Covid development that refers to the establishment of manufacturing in other countries to address supply chain disruption risks caused by concentration in one country.
According to Banga, one advantage India has is that a "very high" percentage of its GDP comes from domestic production. "Your exposure to the typical impact of global slowdowns, caused by trade slowdown, is cushioned by the relatively high percentage of the economy that comes from domestic consumption, which is very helpful at a time (like this)," he explained. The Indian economy grew 7.2% in FY23 and is expected to grow 6.3% in FY24, according to the World Bank. Banga emphasised that India can maintain this momentum and that growth and job creation are the most effective ways to combat poverty.